Heading into the holiday season, warehouses maintain strong inventory levels and are less likely to reload in an inflationary environment, resulting in lower import volumes at the ports, according to a report from the commercial real estate company Transwestern.
That trend comes as consumer spending decelerated as excess savings dwindled amid persistent economic uncertainty, while consumer confidence declined for consecutive months to close the quarter, the company said in its industrial report on U.S. markets for the third quarter.
Shoppers are still buying, though, as sales growth for e-commerce continues to outpace brick-and-mortar, boding well for sustained warehouse market expansion, Transwestern said. Other positive forces included continued onshoring, which is driving manufacturing development in the U.S., thanks to increasing incentivizes from public funding packages, including tax credits through the Inflation Reduction Act.
Those expanding conditions are happening despite an anticipation that fuel costs will rise, which could benefit intermodal shipping, which is more energy efficient, especially on longer-distance deliveries.
Overall, total occupied space grew for the 55th straight quarter, though it was the third-lowest increase during the streak. Despite continued occupancy growth, the overall vacancy rate increased by 50 basis points as new deliveries widely outpaced net absorption totals.
And companies are paying more for that space, as the average asking rent registered a record high for the 25th consecutive quarter, climbing above $9.00 per square foot. Specifically, rents increased 16.0% year over year, setting a record for the seventh consecutive quarter.
